Welcome to our first edition of Charitable Strategies for Professional Advisors, formerly Planned Giving News. In this monthly e-newsletter we will share tax-wise giving strategies to help your clients make the most of their charitable gifts.


Snapshots of Smart Giving

Growing up in India, Dilip and Vibha Patel say their
parents instilled in them the importance of a good education
and hard work. Because they wanted to share this opportunity with others, the couple worked with Joe Carter to create a Charitable Gift Annuity. The remaining assets of the annuity will help students like Jesus Garcia, pictured with the Patels, attend college through the Dilip and Vibha Patel Scholarship Fund at the Oklahoma City Community Foundation.
Are Charitable Gift Annuities Right for Your Clients?
by Joe Carter, Oklahoma City Community Foundation Director of Development 
  As the new tax law takes effect this year, many donors are concerned they may not be able to write off their charitable gifts. One option to consider is taking advantage of the increased rates on charitable gift annuities. On July 1, the American Council on Gift Annuities (ACGA) increased the maximum payout rates for charitable gift annuities (CGAs) for the first time in more than a decade. This means the return rates are now 0.30-0.50 percent higher for individuals of the age when most annuity contracts are executed (the average age is 77).
 
Charitable Gift Annuities have been around since 1843 when the American Bible Society began offering this donor-friendly charitable tool to donors who were looking to support their cause, realize a charitable income tax deduction and receive a fixed income stream for life. CGAs have always been a favorite financial planning charitable tool of mine, but now that rates are on the rise they are once again very popular among donors.
How Does a CGA Work? 
The donor transfers an asset (typically cash, securities or real estate) to charity in exchange for a lifetime income stream for themselves and/or a loved one, and receive an immediate charitable income tax deduction. At the end of life or termination of the contract, the charity receives the remaining balance in the annuity. For example, a 75-year-old can expect to receive a 6.2 percent rate of return and an approximate charitable deduction of 45 percent of the face value of the contract.  


We have many donors that like to use highly-appreciated stock to fund a CGA, because they can avoid the immediate capital gains tax while allowing full use of the gift to provide an income stream. Other donors prefer using cash, because a larger portion of the income will be considered tax-free for a period of years. In some cases, donors will use CGAs as a portion of their fixed-income portfolio, knowing this is a gift and the principal can never be returned. However, given the favorable returns are typically higher than those of CDs and money markets, CGAs are very attractive for donors who wish to support charitable causes.
 
Another benefit of CGAs is they have no age limitations compared to commercial annuities.  We've executed several CGAs for donors well above the age of 90. Why? A 9.5 percent return is what they would tell you!
 
By funding a CGA at the Oklahoma City Community Foundation, a donor can name a donor advised fund as the beneficiary. Rather than supporting just one charity, this allows them to support a number of charities while also creating a lasting charitable legacy. For a calculation of how a CGA might benefit your clients, visit our online deduction calculator and the schedule of gift annuity rates. Please feel free to contact me to help you create a personalized proposal for your clients at 405/606-2914.   
Upcoming Events 
Do you want to increase your professional knowledge and skills and better serve your clients? Do you want insight that will benefit your clients immediately? This free luncheon through the Oklahoma City Community Foundation and the Cannon Financial Institute helps you make it happen!

August 28
 Retirement Asset Planning for Estate Planners: Compelling Practical Advice 
Registration is closed.  

September 25
Estate Planning and Administration Issues for the Elderly and Disabled

October 23
Income Tax Considerations in Estate Planning and Estate and Trust Administration

Registration for each event will open online following the prior month's teleconference.    
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